$1.44 Dispute Reveals Billions at Stake in Online Customer Feedback

April 25, 2013

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But the hassle over such a trivial matter points out just what the stakes are for online merchants. While companies are also concerned about their online reputation, there are direct financial consequences for eBay seller ratings. The auction site offers financial incentives for "Top Rated Sellers," such as a 20 percent discount on final value fees for some merchants.

Levy said his group had seen a growing number of cases of merchants hoping to get an injunction or remove negative criticism, whether true or not. But Levy said the public should be able to see other customers' experiences with a seller. Otherwise, it's a "serious injury to the public," he said.

"People argue, 'I wasn't looking for money; I wanted to take down criticism.' But that's just as bad because it deprives us of an accurate historical record," Levy said.

Med Express, after publicity over their suit, finally threw in the towel. Radey apologized and said he was withdrawing the lawsuit against Nicholls and eBay.

"Please understand that our customer was never the target of this lawsuit. We had instructed our attorneys to ask for $1 in damages. Her feedback was also never an issue. We fully support her right and all of our customers' right to leave any feedback they desire – true or otherwise!" Radey wrote in a statement. "The issue involved Detailed Seller Ratings or DSRs. The low ratings caused us to lose our Top Rated Seller Plus standing."

Those ratings are significant for online merchants on eBay. "Based on our current volume, this was a potential fee increase of tens of thousands of dollars over the course of a year," he said.

Radey said DSRs can be removed only by court order, "and I was told such court orders were not uncommon."

"I do deeply regret the wording of the lawsuit. I had not read it and only learned of the wording on the blogs," Radey said in his statement, referring to the blogs that had spread news of his lawsuit.

But on April 18, Nicholls, with the help of Jeffrey Nye and Thomas Haren, two lawyers in Ohio who offered to take the case for free, filed a counterclaim against Med Express, Radey and Med Express attorney James Amodio, claiming frivolous conduct and "malice or aggravated or egregious fraud." Nicholls' attorneys said they had seen Radey's comments and were aware he had dropped the lawsuit against Nicholls, but they plan to continue with their countersuit all the same.

"All told, Med Express has sued its out-of-state eBay customers at least seven different times, as part of what appears to be a practice of trying to use the courts to bully people who aren't easily able to defend themselves," Nicholls' attorneys said. "This type of conduct is totally abhorrent to our notions of justice and freedom of speech."

Other companies take a decidedly different approach when customers leave negative comments.

Eli Federman, executive vice president and chief communications officer at 1SaleADay.com, an e-commerce site that takes up to 40,000 orders a day on everything from electronics to jewelry, said his company embraces negative feedback to engage customers in discussion.